India has been ranked as the fastest-growing economy in the world for the last two years. The country is also expected to become the third largest economy in the world by 2030. How did India achieve such rapid growth? What are its strengths and weaknesses?
India is a large developing nation located in South Asia. It is bordered by China to the north, Pakistan to the west, Nepal to the south, and Bangladesh to the east. Its total area is 903,879 square kilometres (352,622 sq mi), and its population was approximately 1.3 billion at the time of its independence in 1947.
India’s global competitiveness
India is largely driven by its human capital,” says Dr Ravi Gurumurthy, Director General of the Centre for Monitoring the Indian Economy. He explains that India’s economic development is closely linked to its educational system. After years of solid growth, the country is now facing several headwinds that are weighing on its exports. In this blog post, we’ll take a look at the current state of Indian exports and what factors are affecting them.
Let’s start with a look at the overall numbers. According to data from the World Trade Organization (WTO), India’s total merchandise exports grew by 3.3% in 2016 to reach $274 billion. This was down from 7.4% growth in 2015 and 9% growth in 2014 (the WTO does not have 2017 data yet). So, while still growing, Indian exports have slowed down significantly over the past two years or so.
There are several factors behind this slowdown in export growth. First and foremost is weak global demand; as major economies like China and Europe have cooled off, they’ve been buying less from India (and other exporting countries). Additionally, commodity prices – which had been rising for much of the past decade – started falling sharply starting around mid-2014; since commodities make up a significant share of Indian exports (oil alone accounted for 15% of all outbound shipments in 2016), this has weighed heavily on export growth as well. Finally, currency fluctuations have also played a role; after depreciating sharply against the US dollar between 2013 and 2015 (making Indian goods more competitive), the rupee has appreciated somewhat over the past year or so, making those same goods more expensive again. All told, these various factors add up to an environment that has been challenging for exporters.
Why does India need to improve its exports?
India is a developing country with a population of over 1.3 billion people. While the government has made great strides in recent years in terms of economic development, it still lags behind many developed countries in terms of export growth. In order to continue its economic development and improve the standard of living for its citizens, India needs to improve its exports.
There are several reasons why India needs to grow its exports:
- Export growth is essential for GDP growth. In order to sustain high levels of economic growth, India needs to find new markets for its products and services.
- Export-led development can help create jobs and reduce poverty levels within the country.
- Growing exports will help Indian companies become more competitive globally and increase their market share in international markets.
If India improves its exports, it will see an increase in profits. This is because more goods will be sold and more money will be brought in from other countries. Additionally, improved exports can lead to lower prices for Indian products abroad, making them more competitive and increasing demand. Thirdly, help to create jobs and spur economic growth. Lastly, improving export quality can attract foreign investment and help India become a manufacturing powerhouse and enhance the country’s balance of payments.
All of these factors combined would result in increased profits for India’s economy as a whole and we at Kunal International India understand these changes and their interdependence on the business.
India is an extensive and populous country with a diverse economy. A crucial part of its economic success has been its exports. In order to continue this success, India needs to focus on improving its exports. To do this, it must first understand what makes up its current exports. This will allow it to identify areas where it can enhance its product offerings.
Currently, India’s top export categories are mineral fuels ($87 billion), precious metals ($38 billion), textiles ($18 billion), machinery ($17 billion), and organic chemicals ($16 billion). These products make up a significant portion of India’s export economy, but there is room for improvement. For example, in the area of machinery, India could focus on increasing the quality and variety of products that it offers. Additionally, the organic chemical is an area where India has great potential for growth, given the country’s vast natural resources.
By focusing on improving its exports in crucial areas such as these, India can continue to prosper economically while also providing benefits to consumers around the world who would have access to better quality products at competitive prices.